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Wall Street slips as stimulus uncertainty drags on

Sinéad Carew
·3 min read

By Sinéad Carew

NEW YORK (Reuters) - Wall Street's main indexes slipped on Monday as investors worried that they might not see a coronavirus economic stimulus deal before the Nov. 3 presidential election.

While House Speaker Nancy Pelosi said Sunday that she was optimistic legislation could be pushed through before the election, but that an agreement would have to come by Tuesday for that to happen.

"People are coming around to the idea that it's a really short time frame and it's probably not going to happen before the election," said Shawn Snyder, head of investment strategy at Citi's personal wealth management business.

While the majority of investors think there will be a COVID-19 relief bill according to Snyder, they don't know when it will happen and "would like clarity on it as soon as they can get it," said the strategist.

A spokesperson told Fox on Monday that the White House was "cautiously optimistic" that Pelosi was moving toward making a deal.

But this was after last week when the White House proposed a $1.8 trillion stimulus package that Pelosi rejected because it fell short and stuck to her demand for $2.2 trillion in aid.

At 2:09PM ET, the Dow Jones Industrial Average <.DJI> fell 199.23 points, or 0.7%, to 28,407.08, the S&P 500 <.SPX> lost 29.66 points, or 0.85%, to 3,454.15 and the Nasdaq Composite <.IXIC> dropped 86.68 points, or 0.74%, to 11,584.88.

Wall Street's fear gauge <.VIX> was rising for a sixth straight session as election campaigns kicked into high gear, with early voting starting in Florida, a battleground state that could decide the presidential election.

President Donald Trump and his Democratic challenger Joe Biden will debate for a final time on Thursday.

All 11 major S&P industry sectors were trading lower, with health care <.SPXHC> and communication services index <.SPLRCL> leading the percentage declines, dipping more than 1%.

Amazon.com <AMZN.O>, Facebook Inc <FB.O> and Microsoft Corp <MSFT.O> were all down more than 1% and creating the biggest drags on the S&P 500.

"It's just the general volatility here. I wouldn't be surprised to see this bouncing around all day," said Tony Bedikian, head of global markets at Citizens Bank.

The Dow Jones Transport Average <.DJT> reversed course after making gains earlier on Monday with airlines such as United Airlines <UAL.N> advancing after the U.S. Transportation Security Administration's (TSA) said it screened more than 1 million airline passengers on Sunday for the first time since mid-March.

Video-streaming service Netflix Inc <NFLX.O> was up around 1% ahead of its results on Tuesday.

After the financial sector set a mixed tone to the start of the third-quarter earnings season, investors will look to results from about 91 S&P 500 companies this week, including International Business Machines Corp <IBM.N>, whose quarterly report is expected later in the day.

Oilfield services provider Halliburton Co <HAL.N> posted a fourth consecutive quarterly loss as this year's slump in oil prices due to the COVID-19 pandemic hit demand for its services. Its shares, however, rose 0.2%.

ConocoPhillips <COP.N> slipped 1.3% as it agreed to buy U.S. shale oil producer Concho Resources Inc <CXO.N> for $9.7 billion as the energy sector continued to consolidate. Concho fell 0.9%.

Declining issues outnumbered advancing ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted 25 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 98 new highs and 24 new lows.

(Additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Shounak Dasgupta and Anil D'Silva and Aurora Ellis)